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Court Interest Calculator: Working Out Late Payment Interest | LegalDocuments.co.uk

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Written by Brad Askew Solicitor (non-practising)
Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice.
Updated June 2026 · England & Wales
When someone owes you money and hasn't paid on time, you're often entitled to claim interest on top of the original sum. Working out exactly how much interest has accrued can feel fiddly, particularly if you're preparing a county court claim and want to get the figures right first time. This guide walks you through the arithmetic of calculating interest on late payments, covering the standard approach used for most debts where no other rate has been agreed. Whether you're chasing an unpaid invoice, recovering a personal loan between friends, or preparing particulars of claim for the County Court, getting the interest calculation correct matters. The court will expect the figure to be accurate, and the debtor is entitled to check your workings. I've set out the method below in plain steps, along with a worked example and answers to the questions people most often ask me about claiming interest on overdue sums.

Overview

Interest on a late payment is the extra sum a creditor can claim to compensate them for being kept out of their money. In England and Wales, where the parties haven't already fixed an interest rate in a contract, the court has statutory powers to award interest on judgment debts and on sums claimed in proceedings.

For most civil debts, the rate commonly applied in the County Court is 8% per year simple interest, drawn from section 69 of the County Courts Act 1984. Commercial debts between businesses are treated differently and may attract a higher rate plus a fixed sum under separate late payment legislation.

The calculator method I describe here follows the standard 8% approach that applies to the bulk of ordinary County Court claims. It gives you a daily figure that keeps accumulating until the debt is paid or judgment is entered. Knowing how to produce this number yourself means you can draft your claim confidently, respond to queries from the court, and keep your own records straight as time passes and interest continues to build up.

Key steps

  1. Confirm the debt amount and the due date. Start by being clear about the principal sum that was owed and the exact date payment should have been made. The due date is usually the date on the invoice, the date set out in a written agreement, or the date payment was demanded. Without a firm starting point, your interest figure won't stand up to scrutiny.
  2. Work out the annual interest at 8%. Multiply the outstanding principal by 0.08 to find the interest that would accrue over a full year at the standard statutory rate. For example, on a debt of £2,500, the yearly figure is £200. If a different contractual rate applies, use that instead, but for most ordinary civil debts the 8% rate is the one the County Court will recognise.
  3. Break the annual figure down to a daily rate. Divide the yearly interest by 365 to get the amount accruing each day. Using the example above, £200 divided by 365 gives roughly 55 pence per day. Keeping a daily figure is useful because interest continues to build right up to the day of judgment or payment, and you'll need to update the total if the matter drags on.
  4. Count the days the debt has been outstanding. Count from the day after the payment was due up to the date you are making the calculation. Be careful with the counting: most people include the end date but not the start date. If the payment was due on 1 March and you're calculating on 31 March, that's 30 days of interest, not 31.
  5. Multiply the daily rate by the number of days. Take your daily interest figure and multiply it by the days outstanding to get the total interest claimable. Add this to the principal when setting out what the debtor owes. If you're issuing a court claim, state the daily rate in the particulars so the court knows interest continues to accrue until judgment.

Common questions

If you're dealing with this kind of situation, a call with an experienced legal adviser can help you work out the right next step — from £149.

Common questions

Q What interest rate can I claim on an unpaid debt?
For most civil debts in England and Wales where no rate has been agreed in writing, the County Court will typically allow simple interest at 8% per year under section 69 of the County Courts Act 1984. If you have a contract that sets a different rate, that rate usually takes priority. Commercial debts between businesses are governed by separate late payment rules that can allow a higher rate and a fixed compensation sum.
Q From what date does interest start running?
Interest normally begins accruing from the day after payment fell due. If an invoice was payable by 30 June, interest starts running on 1 July. Where no specific payment date was set, it usually runs from the date a demand for payment was made. Getting the start date right matters because every extra day adds to the sum you can claim, and the court will check that your dates are consistent.
Q Is the interest simple or compound?
Interest awarded by the County Court under section 69 is simple interest, meaning it's calculated only on the original principal and does not itself generate further interest. Compound interest is generally only available where a contract expressly provides for it or where specific statutory provisions apply. For the vast majority of ordinary debt claims, the simple interest method described here is what you'll be using.
Q Can I claim interest on a debt between businesses?
Yes, but a separate regime applies. The Late Payment of Commercial Debts (Interest) Act 1998 allows businesses to claim statutory interest at a higher rate, plus a fixed sum to cover recovery costs, on qualifying commercial debts. The rate and fixed amounts are set by reference to the Bank of England base rate and change over time, so check current figures before running your calculation on a commercial claim.
Q Do I need to mention interest in my court claim?
If you want the court to award interest, you must set out your claim for it in the particulars of claim. Typically you state the principal, the rate relied on, the period covered, the total interest to the date of issue, and the daily rate at which interest continues to accrue. Leaving interest out of the claim form means the court may not include it in any judgment.
Q Does interest keep running after I issue a claim?
Yes. Interest continues to accumulate at the daily rate you've set out until judgment is entered or the debt is paid. Once judgment is given, different rules apply to interest on the judgment sum itself, and the court will usually address this in the order. Keeping a running daily figure in your paperwork makes it straightforward to update the total at any stage.
Q What if the debtor disputes my interest calculation?
The court will check the arithmetic, so make sure your figures are transparent and easy to follow. Show the principal, the rate, the dates, the number of days, and the daily rate clearly. If the debtor challenges the calculation, the judge will look at whether the rate you've applied is appropriate and whether the period you've claimed for is correct. Clean, simple working tends to survive challenge best.
If you're dealing with this kind of situation, a call with an experienced legal adviser can help you work out the right next step — from £149.

Sources

This guide is based on primary UK law and official guidance.

Brad Askew, Solicitor (non-practising)

Written & reviewed by

Brad Askew Solicitor (non-practising)

Brad is on the roll of solicitors of England & Wales but does not hold a practising certificate and does not provide legal advice. LegalDocuments.co.uk is not a law firm and does not provide regulated legal advice.

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Legal disclaimer
This article is for general information only. It is a tool to help you find your way — not legal advice, and not a substitute for speaking to a qualified adviser about your situation.